Alberta’s housing market is about to slowdown which should improve affordability in 2008, according to
a new housing report issued by RBC Economics. Since November, selling a house in Calgary has been difficult with a the slow buying period and overall lower demand.
RBC currently calculates the need for pre-tax household income for a detached bungalow to be 43 per cent, the standard two-story home to 46 per cent, and the standard townhouse to 33 per cent. The standard condo was the only segment to witness affordability improve to 28 per cent.
In 2007, housing starts plateaued at 48,000 units and this year are expected to drop by 10,000 units. Demand for new and existing homes slowed sharply at the end of 2007 and will likely continue to drop this year. Annual price gains have declined
dramatically from 30 per cent in 2007, down to an expected nine per cent in 2008.
RBC’s Affordability measures for a detached bungalow for Canada’s largest cities are as follows: Vancouver, 72 per cent, Calgary, 46 per cent, Toronto, 46 per cent, Montreal, 37 per cent and Ottawa, 32 per cent.
Highlights from across Canada:
– British Columbia: Housing affordability reached into uncharted
territory late last year as affordability deteriorated to its worst
level since 1985 when RBC started tracking conditions. Modest
improvements are expected for 2008.
– Saskatchewan: Housing affordability deteriorated sharply across all
home segments last year as a sudden influx of migrants strained
existing housing capacity. In 2008, housing affordability conditions
are expected to stabilize.
– Manitoba: The province’s housing market is still running at full
tilt. Affordability should improve as rising costs start to weigh on
demand and help rebalance the market in 2008.
– Ontario: Income growth is expected to cool amidst toughening economic
conditions in the province. On balance, our affordability forecast in
2008 points to overall improving conditions as mortgage rates drift
lower and price gains moderate even further.
– Quebec: Housing affordability continued to deteriorate last year.
Stable and modest price gains combined with some mortgage rate relief
this year should translate into an overall improvement in
affordability conditions across all four home segments in 2008.
– Atlantic region: Strong house price gains and rising mortgage rates
chipped away at affordability conditions in 2007. In 2008, Atlantic
Canada is expected to move onto a softer growth trajectory as housing
construction activity gears down.
For the full report check out Royal Bank.
[tags]housing, housing prices, calgary housing, alberta housing[/tags]